Lonza says Pharma business and restructuring efforts are on track

31-Oct-2013 - Last updated on 31-Oct-2013 at 13:00 GMT

Lonza says Pharma and restructuiring efforts are on track

Lonza says its pharmaceutical business ‘performed as expected’ in the third quarter and that its restructuring efforts – which have seen it cut nearly 800 jobs– are on track to deliver productivity gains.

The Swiss ingredient and life science firm – which is due to hold a third quarter press conference this afternoon – did not disclose how much revenue its dealings with the drug industry had generated in the period but did reiterate its expectation of 10% earnings growth in 2013.

Lonza also said its CAPEX – spending on facilities, technologies and systems – will be less than CHF250m ($277m) this year.

In his preconference call statement CEO Richard Ridinger focused on work Lonza has done to realign its business model in the face of competition, a strong Swiss Franc and rising raw materials prices.

"In our half year update, we have announced a number of important decisions regarding our footprint and portfolio. Our organization is working intensively on the implementation of these numerous transformational activities which will help increase our productivity, reduce our complexity and transform our business portfolio."

Again the statement was light on specifics, but those details that are provided suggest that Lonza is happy with its efforts to do more high tech and high value development and manufacturing at its facility in Visp, Switzerland.

Lonza started working to address the “Visp challenge” last year, with the idea being that reducing headcount and focusing more high tech work at the site would improve efficiency and compensate for the negative impact competition from Asian API makers had had on its business.

These efforts continued through the remainder of 2012 – with job cuts - and through into 2013 – when Lonza upped the Visp site’s capacity to produce antibody-drug conjugates (ADC), which are a growing area of interest for the biopharmaceutical sector.

In February Lonza further reorganised. The firm combined its custom manufacturing business with its biosciences arm under the “Pharma markets” banner and formed its life science ingredients and microbial control units into a specialty ingredients unit.

All of these efforts are mentioned in the statement issued today.

“In Custom Manufacturing, the pipeline development for long term assets commitment is on track and the business also secured new contracts for small molecule products. The build-out of additional commercial scale Antibody Drug Conjugate (ADC) capacity in Visp is on track in response to continuous high demand for a full service integrated ADC offering, from mAb manufacture to conjugation. “

Lonza also revealed that it has undergone “16 regulatory inspections and follow-up discussions with regulatory agencies for both products and sites. The phasedown of our Hopkinton, Massachusetts is on track.”

The firm also said its "overall headcount at the end of September was 10'045, reflecting a reduction of 744 positions since the beginning of the year."

Asian demand

Another interesting point raised in the statement relates to Lonza’s GS Xceed expression system, which is used to make therapeutic proteins.

Lonza said that 25% of the research agreement it has signed with customers for the system come from business based in Asia which – given that the firm only launched the latest version of the platform in the region in July last year – suggests it is providing popular.